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412 PART 5: THE LEADER AS SOCIAL ARCHITECT
the future can positively affect a company’s performance and fi nancial success. 70
Another study has shown that as much as 44 percent of the variance in profi tabil-
ity of major fi rms may be attributed to strategic leadership. 71
One way leader impact has been evaluated is to examine whether top ex-
ecutive turnover makes a difference. Several studies of chief executive turnover
have been conducted, including a sample of 167 corporations studied over a
20-year period, 193 manufacturing companies, a large sample of Methodist
72
churches, and retail fi rms in the United Kingdom. These studies found that
leader succession was associated with improved profi ts and stock prices and,
in the case of churches, with improved attendance, membership, and dona-
tions. Although good economic conditions and industry circumstances play a
part in improved performance for any organization, the top leader had impact
beyond these factors. Overall, when research has been carefully done, top leader
succession typically explains from 20 percent to 45 percent of the variance in
organizational outcomes. 73
More recent research has explored the notion of top leadership teams, as
opposed to an individual executive. The makeup of the top leadership group is
believed to affect whether an organization develops organizational capability and
the ability to exploit strategic opportunities. A team provides diverse aptitudes
and skills to deal with complex organizational situations. Many researchers be-
lieve the confi guration of the top leadership team to be more important for orga-
nizational success than the characteristics of a single CEO. For example, the size,
diversity, attitudes, and skills of the team affect patterns of communication and
collaboration, which, in turn, affect company performance. 74
The emerging focus on teams is more realistic in some ways than focusing
on individual leadership. In a complex environment, a single leader cannot do all
things. An effective team may have a better chance of identifying and implement-
ing a successful strategy, of discerning an accurate interpretation of the environ-
ment, and of developing internal capability based on empowered employees and
a shared vision. Without a capable and effectively interacting top leadership team,
a company may not adapt readily in a shifting environment. Although research
in the area of leader impact is still relatively limited, it does seem to affi rm the
belief that the choices leaders make have significant impact on an organization’s

performance.

Summary and Interpretation

Leaders establish organizational direction through vision and strategy. They are
responsible for studying the organization’s environment, considering how it may
be different in the future, and setting a direction everyone can believe in. The
shared vision is an attractive, ideal future for the organization that is credible yet
not readily attainable. A clear, powerful vision links the present and the future by
showing how present actions and decisions can move the organization toward its
long-range goals. Vision energizes employees and gives them an inspiring picture
of the future to which they are eager to commit themselves. The vision can also
give meaning to work and establish a standard of excellence by presenting a chal-
lenge that asks all workers to give their best.
The mission includes the company’s core values and its core purpose
or reason for existence. Visions for the future change, whereas the mission